RBI will weigh options to protect rupee

The Reserve Bank of India (RBI) on Friday said that it was weighing several options, including extension of lending support, to help oil marketing companies negotiate foreign currency volatility.

According to Dr Subir Gokarn, Deputy Governor, RBI, the apex bank does not want to do anything without measuring the benefits of its actions or their future impact.

Adequate reserves

“At this point all options are being actively considered. But we have to keep in mind the pros and cons. We do not want to do something that might end up being costly or destabilising,” he told newspersons on the sidelines of the 4th Banking Summit organised by the Indian Chamber of Commerce in the city.

He further added that the RBI will continue to use a mix of intervention and administrative steps to protect the rupee and said that the central bank has adequate reserves to meet its obligations.

The rupee closed at Rs 54.49 on Friday against the dollar.

“In last 2-3 days, pressure has been global and the currency has responded to that. We want to ensure that if we take any action there is some scope of impact,” Dr Gokarn said.

“Curbing volatility (of the rupee), still remain our specific objective. At the same time we do not want to come in the way for any end use. So we would like to balance,” he added.

Rising NPAs

Asked about the rise in non-performing assets of banks, Dr Gokarn said that although the increase of such non-performing assets was a “matter of concern”, it would not be a “threat to the system”.

“While the rise in non-performing assets is matters if concern, I do not think the numbers are threat to the system,” he said adding that following a moderation of growth, an increase in non-performing assets is to be expected.

abhishek.l@thehindu.co.in